Singapore’s Hong Leong Finance is going to take advantage of the country’s plan to issue virtual banking licenses to transform itself into a tech-savvy lender.
The company is currently in talks with FinTechs about a joint application for one of the licenses, said President Ang Tang Chor, adding that Hong Leong would like to attract more millennials and newly established firms to its customer base.
“We have the customer base, we have the reach — but we don’t have the platform,” Ang said in an interview, according to Yahoo Finance.
Earlier this year, the Monetary Authority of Singapore announced plans to grant up to five virtual bank licenses to FinTechs and other non-bank firms in an effort to boost competition in its financial industry. Applications are due by the end of the year.
Small and medium-sized businesses make up about 70 percent of Hong Leong’s loan book, with the firm requiring potential borrowers to provide a history of financial information before approving new loans. This can be an issue for some individuals and many smaller firms. Partnering with a financial technology company could enable Hong Leong to access new data sets, such as real-time information on company invoices, or individuals’ credit card records and social media posts.
“The FinTechs have one advantage: they lend against data,” Ang said. “That is now slowly becoming more and more important to financial institutions,” which have traditionally used other criteria such as company balance sheets, he added.
Ang would not name the tech firms he has been talking to, and added that some are hesitant to enter in to a partnership because they would prefer to submit a solo application. Still, Hong Leong needs to adapt if it wants to attract younger clients.
“The next generation of depositors and clients are going to be people who are tech-savvy, so we will have to go in that direction,” he said.